Figure 10-9

-One of the justifications of government stabilization policy is that it may
A)increase the fluctuations in inflation and employment.
B)increase the multiplier effect of changes in autonomous spending.
C)increase the volatility of economic variables.
D)reduce the severity of inflation and unemployment.

Question

Figure 10-9
​ 
-One of the justifications of government stabilization policy is that it may
A)increase the fluctuations in inflation and employment. 
B)increase the multiplier effect of changes in autonomous spending. 
C)increase the volatility of economic variables. 
D)reduce the severity of inflation and unemployment.

Quizplus · Accepted Answer

The justification of government stabilization policy is to reduce the severity of inflation and unemployment, not increase it. Option B is incorrect because stabilization policy aims to reduce volatility in economic variables.

Figure 10-9 ​

Figure 10-9